The process of choosing a vendor is getting essentially more difficult purchasing feedstock on the global market. Nevertheless, in spite of this, the majority of big transnational corporations make the purchase of feedstock, materials, components and equipment from foreign vendors which is conditional on lower price or the availability of necessary goods nomenclature.
Basic expense factors.
The difficulty of import purchases relies on the necessity of considering so called 'hidden costs' . The purchase executive should compare the level of expenses regarding the delivery of ordered goods from both domestic and foreign vendors. The following list of factors and costs is useful to apply:
- national currency price;
- amount of custom payments ;
- tax payments in another country;
- terms of payment including exchange rate ;
- costs for inventory holding ;
- costs for packaging and marking;
- costs for logistics ;
- insurance payments ;
- costs for preparation of forwarding documents ;
- import charges and tariffs ;
- insurance payments ;
- brokerage payments .
Benefits which might be received from competent sourcing and vendors evaluation may be notable enough. Cost saving in supplies and transporting may bring the essential increase of profit which makes a positive impact on company's commercial viability.
It should also be mentioned that the growth of profit per item might be reached not only reducing the expenses on material purchase, but also reducing the level of inventory investment.
In rapidly intensifying international business competition, the quality of consumers service is becoming extremely important. Purchasing high quality feedstock and materials makes the level of reclamations go down providing stability in production process and, thus, increasing the sales result.
